Japan Renewable Alert 43: Introduction of Mandatory Reserve for Cost of Decommissioning PV Facilities
Energy & Infrastructure Alert | June.12.2019
As discussed in our Renewable Alert Letter 39 dated February 5, 2019, installation and modification work for solar power facilities over a certain scale will now be subject to environmental impact assessment pursuant to the Environmental Impact Assessment Act (“Act Assessment”). This Alert reviews some of the details that have emerged from publicly released outlines of the proposed cabinet order to partially amend the Cabinet Order for Enforcement of the Environment Impact Assessment Act, discussions by the expert committee at the Ministry of Economy, Trade and Industry (METI), and the proposed amendments to the Order for Enforcement of the FIT Act and the public notice of the Minister of Economy, Trade and Industry which include relevant items (collectively, “Proposed Amendments”).
1. Summary of Amendments
As outlined in our Renewable Alert Letter 39 dated February 5, 2019, the Proposed Amendments classify projects of 40,000 kW or greater as Type I (subject to mandatory Act Assessment) and projects of at least 30,000 kW and less than 40,000 kW as Type II (subject to screening for Act Assessment).
With respect to amendments to business purpose or content that are made after the governor’s opinion has been obtained for a project’s preparatory form, note that while the Environmental Impact Assessment Act requires the assessment process to be re-conducted for the project within a certain scope in principle, “minor modifications” (prior to public release of the assessment report) and “minor amendments” (after public release of the assessment report) described under the cabinet order are exempt from this requirement. Under the Proposed Amendments, to qualify as a “minor modification” or a “minor amendment,” any increase in project output should not exceed 10%, and any new location for project facilities should not exceed 300 meters from the original location.
2. Enforcement and Interim Measures
The cabinet order to partially amend the Cabinet Order for Enforcement of the Environment Impact Assessment Act is to go into effect as of April 1, 2020 following promulgation in early July 2019. It was indicated at the June 10, 2019 METI expert committee meeting (15th Renewable Energy Mass Introduction and Next Generation Power Network Subcommittee) that a project will be subject to Act Assessment if its construction plan notice has not been submitted pursuant to the Electricity Business Act as of such date of enforcement.
The expert committee also indicated that the deadline for commencement of operations for solar projects that will be required to undergo Act Assessment due to these amendments will likely be 5 years from the date of FIT approval; the proposed amendments to the Order for Enforcement of the FIT Act and the public notice of the Minister of Economy, Trade and Industry contemplate the details of how such 5-year deadline will be applied in practice with respect to the timing of when FIT approval is obtained.
3. Future Outlook
It appears that amendments to make mega solar subject to Act Assessment will be enforced as of April 1 next year. Amendments to related laws and ordinances, however, are still under discussion. It will be important for developers to accurately determine whether their projects will be subject to Act Assessment, and if so, what restrictions will be imposed, and to fully consider how to prepare for the practical procedures that will be required once the cabinet order takes effect. We encourage you to continue to monitor discussions at METI and the Ministry of the Environment and follow related legal and operational trends.
Please also note that public comments are currently being accepted with regard to proposed amendments to the Order for Enforcement of the FIT Act and the public notice of the Minister of Economy, Trade and Industry which include relevant items. The deadline is July 10, 2019.